Woodbridge shakeup signals Thomson family struggling to find new footing for growth

Geoff Beattie, chief advisor to the Thomson family and the public face of its stable of media and information companies, was front and centre last year for a town hall-style announcement that The Globe and Mail would be moving to gleaming new headquarters.

But he wasn’t heard from Monday, when staff of the newspaper gathered again in Toronto to hear disappointing news that their bold newsroom of the future had been killed by emerging real estate plans.

It prompted some to wonder about the Thomson family’s ongoing commitment to one of its prized assets, a question that broadened and intensified just days later when it emerged that Mr. Beattie will no longer be at the helm of the holding company of Canada’s richest family.

Woodbridge is anchored by a controlling stake in electronic information company Thomson Reuters Corp. Created through a 2007 merger championed by Mr. Beattie and David Thomson, the value of the Thomson Reuters investment has declined by about 40% since.

A statement from the Thomson family Thursday said the change in leadership at Woodbridge comes as the company enters “an important new era.”

Mr. Beattie will remain deputy chairman of Thomson Reuters and his successor at Woodbridge will be joining the company’s board when the transition takes place in a few weeks. But despite this ongoing connection to the family’s business, people familiar with the situation say there was friction between Mr. Beattie and David Thomson, the son of the late Ken Thomson who had made the prescient decision to sell most of the company’s newspapers by 2000 and buy into the electronic information age.

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“He [Beattie] and David Thomson were like oil and water,” said a longtime friend who opined on the departure but requested that his name not be used. He said Mr. Beattie “loved Ken” Thomson, who died in 2006, and that problems with the younger Mr. Thomson were “compounded” when Ken’s advisor John Tory Sr. — who was also Mr. Beattie’s mentor — passed away last year.

Following Ken Thomson’s death, decisions have not been made with the insight into the future he seemed to have, or the financial payoff for Canada’s wealthiest family.

The merger of Thomson Corp., the family’s financial, legal, education and healthcare information firm, with venerable news service Reuters has been particularly painful. It was announced in 2007 and closed the following year.

You need only look at the price [of Thomson Reuters shares] now versus four years ago and it speaks volumes about how difficult the integration was

“You need only look at the price [of Thomson Reuters shares] now versus four years ago and it speaks volumes about how difficult the integration was,” said a financial analyst who tracks the company and asked that his name not be used.

When the deal was announced, Woodbridge’s 70% equity interest was worth about $20-billion. Now, the 55% equity interest held in Thomson-Reuters is worth about $12-billion. This past spring, Forbes magazine pegged the Thomson family’s total wealth at US$17.5-billion, 24% lower than it was just a year earlier.

While the move is unlikely to have a “material near-term impact” on the relationship between Woodbridge and Thomson Reuters, or on the strategic direction of the company, the analyst said he “would not rule out larger asset divestitures and acquisitions as the company looks to re-acquire growth over the next few years.”

Parts of Thomson Reuters, Mr. McReynolds wrote, “are facing structural growth challenges that may eventually require a more major strategic fix.”

The Thomson family’s entire fortune is difficult to measure, with numerous private Woodbridge investments housed in thick binders in Mr. Beattie’s office. While some of those investments could be performing very well, there is almost certainly discontent with the performance of the main public holding, the legacy of David Thomson’s father and his grandfather Roy Thomson. The economic downturn of 2008 and its impact on the global financial services industry has taken its toll on Thomson Reuters.

Another legacy business, The Globe and Mail, has been forced to join other newspapers in trying to find ways to replace or compensate for declining advertising revenue. This summer, Globe staff was asked to take unpaid days off to avoid layoffs and the newspaper has erected a paywall to try to get readers to pony up for their stories and analysis.

Mr. Beattie is being replaced at Woodbridge by David Binet, the chief operating officer and a one-time news reporter. James Smith, who took over as chief executive of Thomson Reuters in January, will remain in that position.

Some observers point to Mr. Beattie’s continuing role on the board of Thomson Reuters as evidence there is no rift between him and the wealthy Toronto family.

If there was truly an issue with the Thomson family, Geoff would have been removed from not just Woodbridge, but Thomson [Reuters] as well

“If there was truly an issue with the Thomson family, Geoff would have been removed from not just Woodbridge, but Thomson [Reuters] as well,” said one longtime company watcher.

When the Thomson Reuters merger was unveiled with great fanfare in 2007, Mr. Thomson and Mr. Beattie told the media it was something Ken Thomson would have wanted. In fact, they said, the idea of the merger was discussed before the senior Mr. Thomson died.

At the news conference announcing the deal, David Thomson told the Financial Post that his father — who had died nearly a year earlier at age 82 — would be celebrating if he had lived to see the union of Thomson and Reuters.

“He’d take my hand, shake it, and wish me luck. He’d wish us all luck. He’d think we were part of something great,” the younger Mr. Thomson said at the time.

Neither Mr. Beattie nor David Thomson could be reached for comment Friday.